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Insight | Time: Jun 20 2017 9:20AM
Will CPL market hold steady in July?
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Almost all nylon enterprises were worried about CPL market in Jul, as CPL supply increment was large in Jul.

Firstly, would new units start up and would plants that had shut down restart as scheduled?

New units with capacity of 600kt/year in total would start up, and the new capacity included 100kt/year of Lubao, 200kt/year of Luxi, 200kt/year of Shenyuan and 100kt/year of Yangquan’s No.2 unit. Besides, Fangming’s units and Yangquan’s No.1 unit were expected to restart.

Shenyuan’s 200kt/year unit was expected to start up in Jul, but Shenyuan would purchase cyclohexanone for production of CPL at early stage, and it would not supply CPL stably until it produced cyclohexanone by phenol stably later. It was not sure whether Shanxi Lubao’s 100kt/year unit would start up or not. To take another two CPL units in Shanxi for instances, Lanhua Sci-Tech’s unit produced successfully with Tianchen’s technology, while startup time of Yangquan’s unit was delayed and it took a long time to adjust product quality and output. For plant restarts, restart of Yangquan’s No.1 unit was delayed to Jul, and restart of Fangming’s unit would be delayed for a long time as company reformation was not successful.

It took some time for new CPL units to supply CPL stably, and restart time of plants that had shut down would be delayed. Thus, CPL supply may not increase evidently in Jul.

Secondly, with the expectation of a sluggish market, market participants held cautious attitudes, then would the market fall?

Players were prepared so that the market would not change fiercely. For example, with the expectation of interest rate lift of the Federal Reserve, players had been prepared, so global market did not fluctuate fiercely after interest rate was raised.

Similarly, as was known to all, there were a number of capacity expansions in the third quarter of 2017, and market participants had been worried. Coupled with surging and slumping market in the first quarter, players had been much more cautious. Plants reduced inventory, controlled funds, produced on demand, and purchased for small lot.
CPL plants also made preparations. Price increases slowed down when prices increased to 13,000yuan/mt in Jun, in case of falling market later.

Besides, with surplus supply, plants had controlled output. Lanhua Sci-Tech and Luxi both had turnaround plans, and it was possible for Haili to shut down one of its four units that were running at full capacity at present once CPL was oversupplied.

Thirdly, nylon 6 HS chip market, the major factor influencing CPL market, was in a good position.

Nylon 6 HS chip and nylon 6 filament markets were in a good position. Product inventory of nylon 6 HS chip plants was at one week on average, and feedstock CPL inventory of HS chip plants was also at a low level. Nylon 6 filament plants were running at a high level and inventory was low. Receivables are also collected moderately. Thus, chip and filament plants were under no pressure.

As a whole, CPL market may hold steady in Jul.

*Note: HS- high-speed spinning
   CS- conventional spinning
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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